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C. Methods of Accounting Used by True Companies
Most of the True companies maintained their books and
records on a tax basis and not in accordance with generally
accepted accounting principles (GAAP). There were two
exceptions: (1) Belle Fourche had GAAP basis books before the
Trues obtained 100-percent ownership, and (2) Midland Financial
Corp. kept its books according to bank regulatory requirements,
which approximated GAAP.
For certain True companies, there were substantial
differences between book value computed on a tax basis and book
value computed on a GAAP basis. For Black Hills Trucking and
Belle Fourche, the differences resulted primarily from deducting
accelerated depreciation of tangible personal property for income
tax purposes. No significant tax to GAAP differences existed for
Eighty-Eight Oil (and its predecessors) because the bulk of the
assets held after spinning off the trucking division consisted of
cash and cash equivalents. True Oil’s tax to GAAP discrepancies
resulted from: (1) Deduction of intangible drilling costs for
tax purposes versus capitalization under either the successful
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